Government yet to consider AU$128m data-retention grants: Comms Alliance CEO

Despite applications closing in February, the government still has not called upon its industry working group to divvy up the almost AU$130 million in funding to compensate telcos for data-retention compliance.

The Australian government has yet to consider how it will distribute its AU$128 million in funding to compensate telecommunications providers for the upfront cost of complying with its data-retention legislation, according to Communications Alliance CEO John Stanton.

"More than a year ago now since the legislation passed, and we are still waiting to see how the government's going to deal with the money that is promised to partially compensate service providers for the cost of complying with the data-retention regime," Stanton, speaking at the CommsDay Summit in Sydney on Monday morning, said.

"You recall that it was AU$130 million in the Budget last year that was promised as subsidy funding, and you recall that the Attorney-General's Department determined then to pocket nearly AU$3 million of that just to administer the scheme."

The Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015, passed by the government in March 2015, came into effect in October. It will see customers' call records, location information, IP addresses, billing information, and other data stored by telecommunications providers for two years, accessible without a warrant by law-enforcement agencies.

In January, the government announced a grants program to divide AU$128.4 million between telcos and internet service providers (ISPs) to cover the one-off cost of ensuring compliance.

While applications for the grants were due on February 23, the government has yet to decide -- or even consider -- how it will compensate telcos, Stanton revealed.

"We've so far heard nothing. The government is supposed to convene an implementation working group, of which Comms Alliance is a member, to look at the weightings that will be applied to the applications that have been received, and what that means in terms of who gets how much money," he said.

"Still no word on when that group meets. The attorney-general's office last week said they don't know, and [we] haven't been able to get an answer from the [communications] department either.

"So hopefully, at some point, all of those service providers who are already spending a lot of money for this legislation -- and have been spending it for a long time now -- will understand if and when they will actually get some of the compensation that was promised to them."

Comms Alliance had published a survey the day that data-retention legislation came into effect, revealing "a low state of readiness" among telecommunications providers for the new laws.

Less than a week out from the start date of the regime, telcos had remained uncertain on what the costs imposed on them by setting up such a system would amount to: 10.17 percent said less than AU$1,000; 8.47 percent pointed toward between AU$1,000 and AU$10,000; 32.2 percent suggested AU$10,000 to AU$50,000; 25.42 percent said AU$50,000 to AU$250,000; 11.86 percent said AU$250,000 to AU$1 million; 6.78 percent suggested between AU$1 million and AU$10 million; and 5.08 percent said it would cost them more than AU$10 million.

Stanton had previously argued that the AU$128 million in funding was predicted to cover just one-third to one-half of telcos' estimated costs.

"In light of the survey results, the onus remains on government to work constructively with industry -- and not rush to enforcement -- over coming months to help providers come into line with what is proving to be a very challenging and somewhat confusing impost on the industry," Stanton said.

Australia's self-described peak body for Australian internet users, Internet Australia, agreed that the grants program will not go far enough to cover the costs incurred.

"We are concerned that it has taken so long for this [program] to occur. Our ISP members have had to incur considerable costs without knowing what, if any, compensation they might receive," Internet Australia CEO Laurie Patton told ZDNet in January.

"We remain concerned that the amount allocated -- AU$128 million -- is well short of the likely total costs as estimated by our ISP members and by the government's own advisor, PwC.

"ISPs are unlikely to absorb the shortfall, so consumers can be expected to be slugged with what can best be described as an 'internet tax' in the form of increased access fees."

Internet Australia had previously claimed that data-retention laws could send smaller ISPs broke.

"[There is a] very real prospect of ISPs going out of business if they are not adequately reimbursed for the costs of implementation and the ongoing operating costs incurred in complying with this questionable law," Patton said in September last year.

"There is a risk that some, perhaps many, of the smaller ISPs will simply go out of business as a result of this new law. This is especially unfortunate for rural internet consumers who rely on local ISPs because they offer a specialised and personalised service.

"At the very least, the government needs to commit to funding the costs incurred by ISPs if it insists on retaining this onerous law."

The government will also go without a mandatory data-breach notification regime until 2017 at the earliest, after the Attorney-General's Department released its exposure draft of amendments to the Privacy Act to create such a scheme in December.